July 23, 2008 / 2:48 AM / in 12 years

Nikkei climbs 1 pct as exporters rise, property up

TOKYO (Reuters) - Japan’s Nikkei stock average climbed 1 percent on Wednesday, with Canon Inc and fellow exporters leading it higher after the dollar gained against the yen on oil’s fall to a six-week low.

Mitsubishi Estate Co Ltd and Mitsui Fudosan Co Ltd surged after JPMorgan initiated coverage of them with an “overweight” rating, and other property firms rose in tandem.

Banks gained on relief that major U.S. bank results are now over, with most performing better than expected.

But gains were limited by lingering worries about the U.S. economy, with investors drawing back before Japanese earnings results start moving into higher gear later this month.

“There’s definitely a sense that the market has survived potential problems, now that the U.S. bank earnings are behind it, and this buoyed financials both on Wall Street and in Tokyo,” said Yutaka Miura, senior technical analyst at Shinko Securities.

“But now Japanese results lie ahead, along with a sense that not many good things can be expected from this, so the Nikkei is unlikely to be pushed actively higher,” he said.

Other market players said that while things may look good for Wall Street at this point, much uncertainty still lies ahead.

“We’re just seeing a temporary bright patch,” said Yoku Ihara, manager of the investment information department at Retela Crea Securities. “It’s still far too early to let down our guard.”

The benchmark Nikkei ended the morning up 133.69 points at 13,318.65, a day after rising 3 percent — its biggest one-day advance since May 29.

The broader Topix climbed 1.5 percent to 1,306.75.


The real estate subindex IRLTY.surged 5.3 percent to become the top performer among the subindexes after a recent battering due to a number of factors, including worries after the failure of midsize developer Zephyr Co

JPMorgan said Mitsui Fudosan and Mitsubishi Estate had shown stable earnings growth even amid an economic slowdown, sending Mitsui Fudosan up 4.9 percent to 2,450 yen.

“The stock now trades at a substantial discount, primarily due to excessive concerns regarding real estate prices,” JPMorgan analyst Hirokazu Anai wrote in a note.

“We see considerable upside potential for the shares as the market recognises the company’s stable earnings,” he said.

Mitsubishi Estate climbed 6 percent to 2,545 yen to become one of the top contributors to the Nikkei 225. Sumitomo Realty & Development Co Ltd rose 6.1 percent to 2,255 yen.

Oil fell to its lowest level since early June on Tuesday amid concerns about falling U.S. demand and expectations that a hurricane in the Gulf of Mexico would spare most oil operations and while this helped boost much of the market energy shares were predictably battered.

Oil and gas field developer Inpex Holdings Inc shed 4.2 percent to 1.11 million yen, becoming one of the larger drags on the Nikkei, while trading houses suffered as well.

Itochu Corp trimmed some of the sharp gains made on Tuesday to sink 1.6 percent to 1,058 yen, while Marubeni Corp was down 0.9 percent at 776 yen.

Chip equipment makers extended Tuesday’s losses to become the largest drag on the Nikkei, with Tokyo Electron Ltd down 3.2 percent at 5,990 yen and Advantest Corp sliding 2.6 percent to 2,265 yen.

But firmer banks kept the overall average bolstered, with Mizuho Financial Group up 3.6 percent at 579,000 yen and Sumitomo Mitsui Financial Group up 3.2 percent at 877,000 yen. Mitsubishi UFJ Financial Group rose 2.7 percent to 1,013 yen.

Canon gained 1.4 percent to 5,220 yen and Honda Motor Co rose 3.3 percent to 3,720 yen. Industrial robot maker Fanuc Ltd rose 3.4 percent to 9,990 yen.

Trade picked up, with 949 million shares changing hands, compared with last week’s morning average of 858 million. Advancing shares beat declining ones by more than four to one.

Reporting by Elaine Lies; Editing by Chris Gallagher

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